Dear Clients,
As in previous years we would like to remind you of the possibility of the profit allowance (= Gewinnfreibetrag) for 2024.
Profit Allowance
Self-employed persons can reduce their taxable profit with the automatically granted "basic profit allowance" (= Grundfreibetrag). The “basic profit allowance” applies for a taxable profit up to EUR 33,000. Above this (= for profits of more than EUR 33,000) additional income tax can be saved through the "investment-related profit allowance" (= investitionsbedingter Gewinnfreibetrag).
Up to a profit of EUR 33,000 the “basic profit allowance” will be considered automatically
Up to a profit of EUR 33,000 the “basic profit allowance” will be considered automatically and without any further requirements. The amount of the “basic tax-free allowance” is 15 % of the profit (= EUR 4.950).
“Investment-related profit allowance” for a profit of more than EUR 33,000
If the expected taxable profit in 2024 exceeds the amount of EUR 33,000, investments must be made in certain assets in order to benefit from the investment-related profit allowance. The investments must be made before the end of 2024.
Schema of the profit allowance:
- 13 percent for the profit share between EUR 33,001 and EUR 178,000
- 7 percent for the profit share between EUR 178,001 and EUR 353,000
- 4,5 percent for the profit share between EUR 353,001 and EUR 583,000
What are possible investments for the profit allowance?
Investments can be done into fixed assets, e.g. a computer which will be used for at least 4 years in the company. Unfortunately cars cannot be considered for the investment-related profit allowance.
Furthermore, it is possible to invest in certain securities, e. g. federal bonds, bank bonds, corporate bonds, certain investment and real estate funds and guarantee certificates as well as “Wohnbankanleihen”. The securities must be held in the bank deposit for at least 4 years.
Please contact your bank in order to find an optimal solution for you.
Is the Profit Allowance applicable for me?
We are happy to help you answering all questions of whether and to what extent you should use the profit allowance. Please note that the investment e.g. securities must be acquired before the end of 2024!
Best regards
Manfred Gross
Vienna, November 2024
